Council could shave Hanover tax hike Wednesday

Officials to consider scaled-back tax increase that would take the rate to 5 mills.

The Hanover Borough Council is expected to vote Wednesday evening on a scaled-back property tax increase for next year.

Council Finance Committee Chairman Henry McLin and Councilwoman Heidi Hormel said they expect to vote at the council's regular meeting Wednesday to raise the property tax rate by 1.01 mills, from 3.99 to 5 mills.

That's a half-mill lower than the increase the council approved last month.

And a 1.01-mill increase in that amount would mean property owners would pay $101 more annually for every $100,000 of assessed real-estate value.

The council had approved a resolution last month that called for increasing the tax rate by 1.51 mills, or 38 percent, in order to fund a proposed $30.2 million budget in 2013. Council members re-evaluated the tax increase after a strong reaction from residents and property owners, and they hammered out a compromise rate at their finance committee meeting last week, officials said.

"I've said from the beginning I know we needed an increase," Hormel said. "But I am pleased the council as a group came together and went over it and said we can't have this kind of increase. We need to do this for our town, so we don't hit people's pocket books."

"We built a consensus," she said. "The majority would like the tax increase decreased to 1.01 mills."

Council President John Gerken confirmed the council intends to enact a smaller increase than originally planned but did not provide a specific figure.

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"It's lower than what it was before. It's a considerable amount less," he said. "It's a good compromise but it still has to be voted on. Anything could happen."

McLin said community reaction to the proposed 38-percent increase was a factor in re-examining the increase.

"We took into consideration all the response we got from the community," he said. "We're trying to do the best we can to keep the budget under control."

McLin said there was nothing specifically removed from the 2013 budget but all expenses would be re-evaluated next year.

"We're going to have to make some cuts as the year goes along in order to meet payroll," McLin said.

For now, Gerken said, the money to balance the budget was taken from the cash carry-in funds.

"There is nothing that isn't on the table" when it comes to expenses, he said. "We're going to look at ways we can cut costs. We'll see where we are next year."

Increases in wages, health insurance and utility costs are driving the need for the tax rise, officials said.

It would be the first time property taxes have increased in the borough in nine years.

"We've worked at keeping it a 0-percent increase, even with the economy," Hormel said. "The staff is good at using what they have."

Borough Manager Barb Krebs pointed out the council has saved residents a combined $4 million in property taxes by not raising the rates incrementally over the years.

"It is cumulative," she said. "They maintained as long as they could. They had balanced budgets and cut costs."

Krebs said the borough used roughly half of its $2.6 million in reserve funds this year to balance the 2012 budget. Those funds are needed early in the year to meet payroll before taxes come in to the borough, she said.

Hormel said council realized a tax increase would be difficult for homeowners in the borough.

"We were aware of it. None of us on council get out of taxes; we all pay," she said. "We're hoping we have balanced the needs of everybody."

The Hanover Borough Council is scheduled to meet at 7:30 p.m. Wednesday, and the council is expected to vote to shave a half-mill off the property tax increase the council approved last month. Up for vote is a motion to raise taxes by 1.01 mills, which would raise the rate to 5 mills. The council had proposed raising the rate to 5 .5 mills. The meeting is held in the council chambers at the 44 Frederick St. borough building